New | Jack Ma’s Reorient Group brokerage rings up first half loss
Brokerage company Reorient Group, majority owned by Alibaba’s billionaire founder Jack Ma Yun, reported its first half loss increased 28 per cent from last year to HK$55.5 million, the company announced late on Tuesday.
The red ink came mainly from valuation losses in its equity position with consolidated net loss from financial assets reaching HK$48 million in the first half of this year, versus a loss of HK$13.9 million over the same period of time last year.
“As the mid-year is upon us, the world has witnessed a high level of market volatility driven most recently by a large sell off in the Chinese equity markets,” Johnson Ko chun-shun, the chairman of the group, said in the result announcement. The stock market sell off has cut fair market value of its stock portfolio by over 40 per cent.
“We consider that there have not been any other material adverse changes to our financial position, but view the significant changes to fair market values to be correlated with a decrease of leverage in the market that has indiscriminately pushed all stocks lower.”
Ma owns 56 per cent of Reorient, paying last May HK$2.7 billion for the stake in the company.
In term of revenue, however, Reorient had increased it to HK$121.6 million for the first half, up 2.5 times from last year at HK$35.2 million thanks to strong market turnover which brought in more commission income and financial consultancy fees.
The share price of the company rose 150 per cent after Ma’s investment was announced and the firm’s shares resumed trading on June 1. It has since underperformed the Hang Seng Index.
Ko is positive about the firm’s outlook, especially after Ma and other investors’ share subscription is completed soon to inject a combined HK$3.9 billion into the company.
“It is expected that this transaction, when completed, will provide fresh capital to the Group to scale and further fund current verticals while also funding new business lines, such as internet financial businesses and asset management,” Ko said. “This investment is expected to raise the profile of the Reorient brand as well as augment size and time of scaling our current platform.”
He also believes Hong Kong will play a bigger role in welcoming listings as the mainland has once again frozen IPOs.
“There is at least six months to the ban and may play into a longer time period of increased HK activity,” Ko said. “Reorient has been able to continue to work through the tough market environment as we continue to grow our corporate finance business and look to expand into other financial service offerings.”
